Cicel (Beijing) Sci. & Tech. Co. v. Misonix, Inc., 2:17-cv-1642 (ADS)(SIL)
| Decision Date | 07 October 2017 |
| Docket Number | 2:17-cv-1642 (ADS)(SIL) |
| Parties | CICEL (BEIJING) SCIENCE & TECHNOLOGY CO., LTD., Plaintiff, v. MISONIX, INC., STAVROS VIZIRGIANAKIS, SCOTT LUDECKER, JOHN SALERNO, RICHARD ZAREMBA, JOHN W. GILDEA, CHARLES MINER, III, PATRICK McBRAYER, and THOMAS M. PATTON, Defendants. |
| Court | U.S. District Court — Eastern District of New York |
APPEARANCES:
DEHENG CHEN, LLC
Attorneys for the Plaintiff
New York, NY 10279
By: Dean T. Cho, Esq., Of Counsel
1330 Avenue of the Americas, Suite 23A
New York, NY 10019
By: Alexander S. Zolan, Esq., Of Counsel
The Plaintiff, Cicel (Beijing) Science & Technology Co., Ltd., ("Cicel" or the "Plaintiff") commenced this action against the Defendants, Misonix, Inc. ("Misonix"), Stavros Vizirgianakis, ("Vizirgianakis"), Scott Ludecker ("Ludecker"), John Salerno ("Salerno"), Richard Zaremba ("Zaremba"), John W. Gildea ("Gildea"), Charles Miner III ("Miner"), Patrick McBrayer ("McBrayer") and Thomas M. Patton ("Patton") (collectively the "Defendants") for damages stemming from a contractual dispute between the Plaintiff and Misonix. The amended complaint, which invokes the Court's diversity jurisdiction, alleges causes of action sounding in (1) unfair competition against the Defendants, (2) tortious interference with contract against the Defendants, (3) tortious interference with a prospective contract against the Defendants, (4) breach of contract against Misonix, (5) conversion against the Defendants, and (6) fraudulent inducement against the Defendants. The Plaintiff asserts diversity jurisdiction pursuant to 28 U.S.C. § 1332.
Presently before the Court is a motion by the Defendants, pursuant to Federal Rule of Civil Procedure ("FED. R. CIV. P." or "Rule") 12(b)(6) to dismiss the Plaintiff's entire amended complaint. For the following reasons, the Defendants' motion to dismiss pursuant to Rule 12(b)(6) is granted with respect to Counts I, II, III, V and VI, but denied with respect to Count IV.
Unless otherwise noted, the following salient facts are drawn from the amended complaint and are construed in favor of the Plaintiff.
The Plaintiff is a Chinese corporation that promotes, markets and distributes medical devices in China and Hong Kong. With a principal place of business in Beijing and seven offices throughout China, the Plaintiff developed and maintained relationships with Chinese physicians, hospitals and other medical device customers. Sales of Misonix's products account for roughly 70% of the Plaintiff's business. Complaint ¶¶ 1, 20.
Misonix is a publically traded, New York corporation that manufactures medical devices. The company's principal place of business is 1938 New Highway, Farmingdale, NY 11735. Id. ¶ 2.
Vizirgianakis is the CEO, President, and Chairman of the Board of Directors ("Board") of Misonix. Id. ¶ 3.
Ludecker was the Senior Vice President of Global Sales and Marketing and Salerno was the Vice President of Regulatory Affairs for Misonix during portions of relevant time period. Zaremba was Misonix's former Vice President of Finance. Id. ¶¶ 4-6.
Miner, McBrayer and Patton were Directors on the Board of Misonix during the relevant time period. Id. ¶¶ 7-9.
The Complaint does not discuss Gildea's present or former position with Misonix.
On May 1, 2010, the Plaintiff and Misonix entered into their first distribution agreement, whereby the Plaintiff began distributing Misonix's products in China. This first distribution agreement resulted in "millions of dollars per year" in ordered products for Cicel. Id. ¶ 13.
On May 20, 2013, the Plaintiff and Misonix entered a second distribution agreement (the "Agreement"). Pursuant to the terms of the Agreement, the Plaintiff became Misonix's sole distributor in China and Hong Kong for certain products, namely the SonaStar Ultrasonic Aspiration System, and the BoneScalpel Ultrasonic Bone Cutting System. The Agreement went into effect on June 1, 2013 and was set to terminate on May 17, 2018. Id. ¶¶ 13-15.
In order to carry out the distribution of Misonix's products, the Plaintiff entered its own distribution contracts with third party distributors. This was done in compliance with theAgreement and with the approval of Misonix. Since June 2013, Cicel continued to build and grow this distribution network in China. Id. ¶¶ 16-18.
Section 13.0 of the Agreement enumerates the reasons that the Agreement may be terminated prior to May 2018:
[1.] The [Plaintiff] commits a breach of any of the terms of this Agreement and the breach is not remedied within 15 days after written notice by [Misonix] requiring a remedy of the same. [2.] To the extent permitted by applicable mandatory law, either [Misonix or the Plaintiff] is declared bankrupt or becomes insolvent or subject to proceedings under any law pertaining to the relief of debtors or the settlement of debts. [3.] The [Plaintiff] fails to meet the minimum purchase requirements for two (2) consecutive quarters. [4.] "any material change" in "the present management, organization, ownership [or] location of [the Plaintiff].
From June 2013 to September 2016, the Plaintiff was a "top global distributor of Misonix products." Id. ¶ 20.
Beginning in November 2014, Misonix began requesting detailed business information from the Plaintiff, including sales information, customer data, competitive data, and the Plaintiff's distribution agreements in China. See id. ¶¶ 23-31. Section 6 of the Agreement details the Plaintiff's disclosure obligations to Misonix. Id. ¶ Ex. A, at 4-6.
In late May 2016, at the instruction of Misonix's Board, Misonix ceased all shipments of product to the Plaintiff and began refusing to provide replacement parts or service to the Plaintiff's customers. Id. ¶¶ 34, 36.
On September 2, 2016, Misonix informed the Plaintiff that it was "wind[ing] down the business relationship between Cicel and Misonix" and requested additional information from Cicel. Id. ¶¶ 37-38.
On September 28, 2016, Misonix filed a Form 8-K with the Securities and Exchange Commission, informing the government and investors that it had "contacted the [SEC and DOJ] to voluntarily inform both agencies that [Misonix] may have knowledge of certain business practices of [the Plaintiff], which practices raise questions under the [Foreign Corrupt Practices Act]."
As a result of Misonix's termination of the Agreement, Cicel has been forced to breach its contracts and agreements with its own distributors and customers, has been threatened with and had to defend against lawsuits, and was "effectively blacklisted" by the Shanghai local authorities. Id. ¶¶ 44, 57, 59.
On March 23, 2017, the Plaintiff commenced this action against the Defendants by filing the original complaint.
On April 5, 2017, the Plaintiff filed the amended complaint, and included multiple attachments, including the Agreement (Exhibit A) as well as correspondences between the Defendants and the Plaintiff (Exhibits B-O).
The present motion was filed on May 19, 2017 by the Defendants seeking to dismiss the entire amended complaint, pursuant to Rule 12(b)(6).
In considering a motion to dismiss pursuant to Rule 12(b)(6), the Court must accept the factual allegations set forth in the complaint as true and draw all reasonable inferences in favor of the Plaintiff. See, e.g., Walker v. Schult, 717 F.3d 119, 124 (2d Cir. 2013); Cleveland v. Caplaw Enters., 448 F.3d 518, 521 (2d Cir. 2006); Bold Elec., Inc. v. City of New York, 53 F.3d 465, 469(2d Cir. 1995); Reed v. Garden City Union Free Sch. Dist., 987 F. Supp. 2d 260, 263 (E.D.N.Y. 2013).
Under the Twombly standard, the Court may only dismiss a complaint if it does not contain enough allegations of fact to state a claim for relief that is "plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1974, 167 L. Ed. 2d 929 (2007). The Second Circuit has expounded that, after Twombly, the Court's inquiry under Rule 12(b)(6) is guided by two principles:
First, although a court must accept as true all of the allegations contained in a complaint, that tenet is inapplicable to legal conclusions, and [t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. Second, only a complaint that states a plausible claim for relief survives a motion to dismiss and [d]etermining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.
Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 664, 129 S. Ct. 1937, 1940, 173 L. Ed. 2d 868 (2009)).
A complaint must include "a short and plain statement of the claim showing that the pleader is entitled to relief," in order to survive a motion to dismiss. FED. R. CIV. P. 8(a)(2). Under Rule 8, a complaint is not required to allege "detailed factual allegations." Kendall v. Caliber Home Loans, Inc., 198 F. Supp. 3d 168, 170 (E.D.N.Y. 2016) (quoting Twombly, 550 U.S. at 555). DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 113 (2d Cir. 2010) (quoting Cooper v. Parsky, 140 F.3d 433, 440 (2d Cir. 1998)). The Court "[is] not bound to accept as true a legal conclusion couched as a factual allegation." Twombly, 550 U.S. at 555.
For the Plaintiff's fraud based claims, those portions of the complaint are subject to Rule 9(b)'s heightened pleading standard. To meet Rule 9(b)'s heightened pleading standard, these elements must be alleged with specificity. Namely, the...
To continue reading
Request your trial